Earnings release
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1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures NEWS RELEASE For immediate release KP Tissue Releases Third Quarter 2025 Financial Results Accelerating profitable growth and building a new TAD tissue facility to start-up in 2028 Mississauga (ON), November 13, 2025 - KP Tissue Inc. (KPT) (TSX: KPT) reports the Q3 2025 financial and operational results of KPT and Kruger Products Inc. (Kruger Products or the Company). Kruger Products is Canada's leading manufacturer of quality tissue products for the Consumer market (Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan® and Bonterra®) and the Away-From-Home (AFH) market and continues to grow in the U.S. Consumer tissue business with the White Cloud® brand and premium private label products. KPT currently holds a 12.1% interest in Kruger Products. Kruger Products Q3 2025 Business and Financial Highlights • Revenue was $561.1 million in Q3 2025 compared to $521.1 million in Q3 2024, an increase of $40.0 million or 7.7%. • Adjusted EBITDA1 was $85.7 million in Q3 2025 compared to $65.7 million in Q3 2024, an increase of 30.4%. • Net income was $14.6 million in Q3 2025 compared to $18.0 million in Q3 2024, a decrease of $3.4 million. • Declared a quarterly dividend of $0.18 per share to be paid on January 15, 2026. “We accelerated profitable sales growth in the third quarter of 2025, resulting in Adjusted EBITDA improving 30.4% year -over- year to $85.7 million,” stated KP Tissue’s Chief Executive Officer, Dino Bianco. “We are particularly pleased with share gain s in the paper towel and facial tissue categories, which grew over a 52-week period on the strength of heightened brand support and innovations in the premium product segment.” “In terms of our Away-From-Home segment, sales and profitability increased both year-over-year and sequentially, bolstered by consumer brands like Scotties and Cashmere selling well in the commercial market. Our expanded in -sourcing of paper also contributed to generating double-digit Adjusted EBITDA growth for this business.” “Looking ahead, we are on our way to delivering a third consecutive year of strong financial results. In addition, we have significantly deleveraged our balance sheet to prepare for the next phase of investment in support of our growth focus. Accordingly, we are proud to announce the construction of a new, modern TAD tissue facility—with production estimated to start in 2028—to meet rising demand for our ultra-premium products,” Mr. Bianco added. Outlook for Q4 2025 For the last quarter of 2025, we expect Adjusted EBITDA1 to be in the range of Q3 2025. Kruger Products Q3 2025 Financial Results Revenue was $561.1 million in Q3 2025 compared to $521.1 million in Q3 2024, an increase of $40.0 million or 7.7%. The increase in revenue was due to higher sales volume, primarily in the Consumer segment and favourable selling prices across both segments. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales Cost of sales was $460.0 million in Q3 2025 compared to $437.3 million in Q3 2024, an increase of $22.7 million or 5.2%. The increase in cost of sales was primarily due to higher sales volume and additional manufacturing overhead spend to invest in our sites, partially offset by lower pulp prices compared to the year ago quarter. Freight rates were lower compared to Q3 2024 while warehousing costs increased, related primarily to higher sales volumes. As a percentage of revenue, cost of sales was 82.0% in Q3 2025 compared to 83.9% in Q3 2024.
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1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures Selling, general and administrative (SG&A) expenses were $47.9 million in Q3 2025 compared to $46.5 million in Q3 2024, an increase of $1.4 million or 3.0%. The increase was primarily due to additional investment in IT and additional headcount and related compensation costs, resulting in lower contracting costs, to support growth, partially offset by foreign exchange gains on working capital compared to losses in Q3 2024 and lower advertising and promotion spend. As a percentage of revenue, SG&A expenses were 8.5% in Q3 2025 compared to 8.9% in Q3 2024. Adjusted EBITDA1 was $85.7 million in Q3 2025 compared to $65.7 million in Q3 2024, an increase of $20.0 million or 30.4%. The increase was primarily due to higher sales volumes and selling prices along with lower pulp costs and freight rates, partially offset by higher manufacturing overhead spend, warehousing costs and SG&A expenses. Net income was $14.6 million in Q3 2025 compared to $18.0 million in Q3 2024, a decrease of $3.4 million. The decrease was primarily due to a foreign exchange loss, higher income tax expense, higher depreciation expense resulting from the Sherbrooke Expansion Project, higher interest expense and other finance costs, partially offset by higher Adjusted EBITDA1 and lower income from non-controlling interest. Kruger Products Q3 2025 Liquidity Total liquidity, representing cash and availability under the revolving credit agreements, was $388.6 million as of September 30, 2025. KPT Q3 2025 Financial Results KPT had net income of $1.5 million in Q3 2025. Included in net income was $1.7 million representing KPT’s share of Kruger Products’ net income, a dilution gain of $0.1 million and depreciation expense of $0.3 million related to adjustments to carrying amounts on acquisition. New Tissue Plant Investment After investing more than $1 billion in Canada since 2018 to increase tissue capacity and accelerate the growth of our business, the Company also announced today plans to build a new state-of-the-art tissue plant featuring the most modern through-air-dry (TAD) machine and related converting lines in the western United States. This facility will allow the Company to better service its fast-growing U.S. business with ultra -premium tissue products. Location selection is in the final stages and will be announce d along with project scope and financing details at a later date. This new TAD machine will have annual production capacity of approximately 75,000 metric tonnes and is estimated to start production in 2028. This new tissue investment will be made within an unrestricted subsidiary of Kruger Products and is subject to obtaining financing on satisfactory terms. The project is currently expected to be financed 40% by equity and incentives as well as 60% by project finance debt. This new facility , along with our Memphis plant and 9 existing Canadian plants, gives us a strong network to service our growing North American business. Dividends on Common Shares The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on January 15, 2026 to shareholders of record at the close of business on December 31, 2025. Additional Information For additional information please refer to Management’s Discussion and Analysis (MD&A) of KPT and Kruger Products for the third quarter ended September 30, 2025 available on SEDAR+ at www.sedarplus.ca or our website at www.kptissueinc.com. Third Quarter Results Conference Call Information KPT will hold its third quarter conference call on Thursday, November 13, 2025 at 8:30 a.m. Eastern Time. Via telephone: 1-888-699-1199 or 416-945-7677 Via the internet at: www.kptissueinc.com
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1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures Presentation material referenced during the conference call will be available at www.kptissueinc.com. A rebroadcast of the conference call will be available until midnight, November 20, 2025 by dialing 1-888-660-6345 or 289-819- 1450 and entering passcode 86584. The replay of the webcast will remain available on the website until midnight, November 20, 2025. About KP Tissue Inc. KPT was created to acquire, and its business is limited to holding, a limited equity interest in Kruger Products, which is accounted for as an investment on the equity basis. KPT currently holds a 12.1% interest in Kruger Products. For more information visit www.kptissueinc.com. About Kruger Products Inc. Kruger Products is Canada's leading manufacturer of quality tissue products for household, industrial and commercial use. Kruger Products serves the Canadian consumer market with such well-known brands as Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan® and Bonterra®. In the U.S., Kruger Products manufactures the White Cloud® brand, as well as many private label products. The Away-From-Home division manufactures and distributes high-quality, cost-effective product solutions to a wide range of commercial and public entities. Kruger Products has approxim ately 3,000 employees and operates ten FSC® COC-certified (FSC® C-104904) production facilities in North America. For more information visit www.krugerproducts.ca. Non-GAAP Financial Measures This press release uses certain non -GAAP financial measures which Kruger Products believes provide useful information to management of Kruger Products and the readers of the financial information in measuring the financial performance and financial condition of Kruger Products. These measures do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled measures presented by other companies. An example of such a measure is Adjusted EBITDA. Adjusted EBITDA is n ot a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. “Adjusted EBITDA” is calculated by Kruger Products as net income (loss) before (i) interest expense and other finance costs, (ii) income taxes, (iii) depreciation, (iv) amortization, (v) loss on sale of non-financial assets, (vi) loss (gain) on disposal of property, plant and equipment, (vii) foreign exchange loss (gain), (viii) costs related to restructuring activities and (ix) changes in amortized cost of Partnership units liability. A reconciliation of Adjusted EBITDA to the relevant reported results can be found in the Segment and Geographic Results table of this news release. Forward-Looking Statements Certain statements in this press release about KPT’s and Kruger Products' current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward - looking statements. Forward-looking statements in this press release include, but are not limited to, items such as plans to build a new TAD tissue plant and its expected annual production capacity, expected date for starting production, the expected financing structure of the project and certain anticipated benefits of the project. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "pote ntial" or the negative or other var iations of these words or other comparable words or phrases, are intended to identify forward -looking statements. The forward -looking statements are based on certain key expectations and assumptions made by KPT or Kruger Products, including obtaining financing on acceptable terms for the project. Although KPT and Kruger Products believe that the expectations and assumptions on which such forward -looking information is based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that such expectations and assumptions will prove to be correct. The outlook provided in respect of Adjusted EBITDA1 for Q4 2025 is forward-looking information and is based on the assumptions and subject to the risk and uncertainties referred to below. The purpose of the outlook is to provide the reader with an indication of management’s expectations, at the date of this press rele ase, regarding Kruger Products’ future financial performance. Readers are cautioned that this information may not be appropriate for other purposes.
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1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures Many factors could cause Kruger Products’ actual results, level of activity, performance or achievements or future events or developments (which could in turn affect the economic benefits derived from KPT’s economic interest in Kruger Products), to differ materially from those expressed or implied by the forward -looking statements, including, without limitation, the following factors, which are discussed in greater detail in the “Risk Factors – Risks Related to Kruger Products’ Business” section of the KPT Annual Information Form dated March 5, 2025 available on SEDAR + at www.sedarplus.ca: Kruger Inc.’s influence over Kruger Products; Kruger Products’ reliance on Kruger Inc.; consequences of an event of insolvency relating to Kruger Inc.; risks associated with the ownership of the TAD Sherbrooke Project; risks associated with the operation of the TAD Sherbrooke Project; risks associated with the Sherbrooke Expansion Project; operational risks; significant increases in input costs; reduction in supply of fibre; increased pricing pressure and intense competition; Kruger Products’ inability to innovate effectively; adverse economic conditions; dependence on key retail trade customers; damage to the reputation of Kruger Products or Kruger Products’ brands; Kruger Products’ sales being less than anticipated; Kruger Products’ failure to implement its business and operating strategies; Kruger Products’ obligation to make regular capital expenditures; Kruger Products entering into unsuccessful acquisitions; Kruger Products’ dependence on key personnel; Kruger Products’ inability to retain its existing customers or obtain new customers; Kruger Products’ loss of key suppliers; Kruger Products’ failure to adequately protect its intellectual property rights; Krug er Products’ reliance on third party intellectual property licenses; adverse litigation and other claims affecting Kruger Products; material expenditures due to comprehensive environmental regulation affecting Kruger Products’ cash flow; Kruger Products’ pension obligations are significant and can be materially higher than predicted if Kruger Products Management’s underlying assumptions are incorrect; labour disputes adversely affecting Kruger Products’ cost structure and Kruger Products’ ability to run its plants; exchange rate and U.S. competitors; Kruger Products’ inability to service all of its indebtedness; exposure to potential consumer product liability; covenant compliance; interest rate and refinancing risk; and risks relating to information techno logy; cyber-security; insurance; internal controls, trade and tax. Readers should not place undue reliance on forward-looking statements made herein. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information contained herein is made as of the date of press release and KPT undertakes no obligation to publicly update such forward -looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. INFORMATION: Francois Paroyan General Counsel and Corporate Secretary KP Tissue Inc. 905-812-6936 francois.paroyan@krugerproducts.ca INVESTORS: Doris Grbic Director, Investor Relations KP Tissue Inc. 437-882-2596 IR@krugerproducts.ca
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September 30, 2025 December 31, 2024 $ $ Assets Current assets Cash and cash equivalents 149,131 119,460 Restricted cash 44,646 48,375 Trade and other receivables 136,394 138,177 Receivables from related parties 79 80 Inventories 284,638 287,756 Income tax recoverable 5,475 3,208 Prepaid expenses 11,042 6,383 631,405 603,439 Non-current assets Property, plant and equipment 1,425,192 1,509,592 Right-of-use assets 160,198 186,460 Other long-term assets 10 92 Pensions 94,938 92,661 Goodwill 152,021 152,021 Intangible assets 39,403 42,572 Deferred income taxes 23,556 10,500 Total assets 2,526,723 2,597,337 Liabilities Current liabilities Trade and other payables 321,451 346,264 Payables to related parties 11,350 17,829 Income tax payable 1 3 Dividends payable 14,726 14,308 Current portion of long-term debt 97,913 54,168 Current portion of lease liabilities 43,498 40,156 Current portion of long-term payable to related party 5,800 5,800 Current portion of provisions 6,389 4,184 501,128 482,712 Non-current liabilities Long-term debt 1,083,522 1,180,488 Long-term lease liabilities 146,972 165,563 Long-term payable to related party 27,602 31,925 Long-term provisions 8,729 9,398 Pensions 17,400 17,845 Post-retirement benefits 48,504 47,140 Total liabilities 1,833,857 1,935,071 Equity Share capital 327,887 308,622 Contributed surplus 395,382 395,382 Deficit (159,004) (171,874) Accumulated other comprehensive income 92,280 100,177 Equity attributable to Kruger Products 656,545 632,307 Non-controlling interest 36,321 29,959 Total equity 692,866 662,266 Total equity and liabilities 2,526,723 2,597,337 Kruger Products Inc. Unaudited Condensed Consolidated Statements of Financial Position (thousands of Canadian dollars)
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3-month period ended September 30, 2025 3-month period ended September 30, 2024 9-month period ended September 30, 2025 9-month period ended September 30, 2024 $ $ $ $ Revenue 561,145 521,085 1,643,335 1,510,317 Expenses Cost of sales 459,988 437,202 1,373,175 1,262,433 Selling, general and administrative expenses 47,906 46,533 146,277 133,145 Restructuring costs 29 - 3,731 219 Operating income 53,222 37,350 120,152 114,520 Interest expense and other finance costs 21,569 17,997 63,826 51,132 Other expense (income) 6,836 (5,266) (13,448) 7,152 Income before income taxes 24,817 24,619 69,774 56,236 Current tax expense 242 1,768 2,050 3,149 Deferred tax expense 9,191 3,244 9,274 11,723 Income tax expense 9,433 5,012 11,324 14,872 Net income including non-controlling interest 15,384 19,607 58,450 41,364 Net income attributable to non-controlling interest 838 1,614 6,362 3,823 Net income attributable to Kruger Products 14,546 17,993 52,088 37,541 Kruger Products Inc. Unaudited Condensed Consolidated Statements of Income (thousands of Canadian dollars)
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3-month period ended September 30, 2025 3-month period ended September 30, 2024 9-month period ended September 30, 2025 9-month period ended September 30, 2024 $ $ $ $ Cash flows from (used in) operating activities Net income including non-controlling interest 15,384 19,607 58,450 41,364 Items not affecting cash Depreciation 30,259 26,561 103,875 78,688 Amortization 2,190 1,739 6,170 4,300 Loss (gain) on sale of property, plant and equipment - - (5) 269 Loss on disposal of leased assets - - 23 - Foreign exchange loss (gain) 6,836 (5,266) (13,448) 8,033 Interest expense and other finance costs 21,569 17,997 63,826 51,132 Pension and post-retirement benefits 2,844 3,680 8,417 8,964 Provisions 1,930 1,297 5,859 3,415 Income tax expense 9,433 5,012 11,324 14,872 Loss on sale of non-financial assets - 15 - 27 Total items not affecting cash 75,061 51,035 186,041 169,700 Net change in non-cash working capital 25,097 (7,287) (29,471) (52,974) Contributions to pension and post-retirement benefit plans (869) (1,154) (2,884) (3,418) Provisions paid (655) - (4,679) (3,695) Income tax payments, net (681) (680) (2,492) (3,121) Net cash from operating activities 113,337 61,521 204,965 147,856 Cash flows from (used in) investing activities Purchases of property, plant and equipment (13,451) (7,857) (23,313) (15,821) Purchases of property, plant and equipment related to the Sherbrooke Expansion Project (1,796) (26,740) (19,173) (116,167) Interest paid on credit facilities related to the Sherbrooke Expansion Project - (2,347) - (5,136) Government assistance received (31) - 3,119 - Purchases of software (989) (7) (2,083) (294) Proceeds on sale of property, plant and equipment - - - 28 Net cash used in investing activities (16,267) (36,951) (41,450) (137,390) Cash flows from (used in) financing activities Proceeds from long-term debt (22,017) 5,765 9,171 119,197 Repayment of long-term debt (16,613) (11,852) (49,118) (33,045) Payment of deferred financing fees (30) (83) (23) (1,312) Payment of lease liabilities (8,738) (9,191) (25,475) (26,463) Change in restricted cash 31,680 (1,183) 3,730 (32,381) Interest paid on long-term debt (9,975) (15,460) (41,396) (38,839) Payment to related party - - (5,800) (5,800) Dividends paid, net (8,136) (7,868) (24,205) (17,425) Net cash used in financing activities (33,829) (39,872) (133,116) (36,068) Effect of exchange rate changes on cash and cash equivalents held in foreign currency 583 (637) (728) 1,089 Increase (decrease) in cash and cash equivalents during the period 63,824 (15,939) 29,671 (24,513) Cash and cash equivalents - Beginning of period 85,307 127,154 119,460 135,728 Cash and cash equivalents - End of period 149,131 111,215 149,131 111,215 Kruger Products Inc. Unaudited Condensed Consolidated Statements of Cash Flows (thousands of Canadian dollars)
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3-month period ended September 30, 2025 3-month period ended September 30, 2024 9-month period ended September 30, 2025 9-month period ended September 30, 2024 $ $ $ $ Segment Information Segment Revenue Consumer 468,313 429,196 1,382,725 1,255,410 AFH 92,832 91,889 260,610 254,907 Revenue from external customers 561,145 521,085 1,643,335 1,510,317 Other segment items Consumer 390,069 366,782 1,159,245 1,070,037 AFH 82,453 85,287 238,479 230,966 Corporate and other costs 2,922 3,351 11,665 11,291 Total other segment items 475,444 455,420 1,409,389 1,312,294 Adjusted EBITDA Consumer 78,244 62,414 223,480 185,373 AFH 10,379 6,602 22,131 23,941 Corporate and other costs (2,922) (3,351) (11,665) (11,291) Total Adjusted EBITDA 85,701 65,665 233,946 198,023 Reconciliation to net income: Depreciation and amortization 32,450 28,300 110,045 82,988 Interest expense and other finance costs 21,569 17,997 63,826 51,132 Loss on sale of property, plant and equipment - - 18 269 Loss on sale of non-financial assets - 15 - 27 Change in amortized cost of Partnership unit liability - - - (881) Restructuring costs, net 29 - 3,731 219 Foreign exchange loss (gain) 6,836 (5,266) (13,448) 8,033 Income before income taxes 24,817 24,619 69,774 56,236 Income tax expense 9,433 5,012 11,324 14,872 Net income including non-controlling interest 15,384 19,607 58,450 41,364 Geographic Revenue Canada 301,360 282,222 889,217 827,363 US 259,785 238,863 754,118 682,954 Total revenue 561,145 521,085 1,643,335 1,510,317 Kruger Products Inc. Unaudited Segment and Geographic Results (thousands of Canadian dollars)
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September 30, 2025 December 31, 2024 $ $ Assets Current assets Dividends receivable 1,801 1,798 1,801 1,798 Non-current assets Investment in associate 69,500 69,517 Total assets 71,301 71,315 Liabilities Current liabilities Dividend payable 1,801 1,798 Total liabilities 1,801 1,798 Equity Common shares 22,934 22,762 Contributed surplus 144,819 144,819 Deficit (115,635) (116,673) Accumulated other comprehensive income 17,382 18,609 Total equity 69,500 69,517 Total liabilities and equity 71,301 71,315 KP Tissue Inc. Unaudited Condensed Statements of Financial Position (thousands of Canadian dollars)
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3-month period ended September 30, 2025 3-month period ended September 30, 2024 9-month period ended September 30, 2025 9-month period ended September 30, 2024 $ $ $ $ Share of income 1,700 2,259 6,372 4,758 Depreciation of fair value increments (264) (278) (827) (847) Equity income 1,436 1,981 5,545 3,911 Dilution gain 114 107 323 500 Net income 1,550 2,088 5,868 4,411 Basic earnings per share 0.15 0.21 0.59 0.44 Weighted average number of shares outstanding 10,007,057 9,979,383 10,000,087 9,973,463 KP Tissue Inc. Unaudited Condensed Statements of Income (thousands of Canadian dollars, except share and per share amounts)
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3-month period ended September 30, 2025 3-month period ended September 30, 2024 9-month period ended September 30, 2025 9-month period ended September 30, 2024 $ $ $ $ Cash flows from (used in) operating activities Net income 1,550 2,088 5,868 4,411 Items not affecting cash Equity income (1,436) (1,981) (5,545) (3,911) Dilution gain (114) (107) (323) (500) Total items not affecting cash (1,550) (2,088) (5,868) (4,411) Decrease in payable to investee - (376) - (660) Tax refunds, net - 376 - 660 Net cash from operating activities - - - - Cash flows from (used in) investing activities Dividends received, net 1,739 1,743 5,229 5,239 Net cash from investing activities 1,739 1,743 5,229 5,239 Cash flows from (used in) financing activities Dividends paid, net (1,739) (1,743) (5,229) (5,239) Net cash used in financing activities (1,739) (1,743) (5,229) (5,239) Increase (decrease) in cash and cash equivalents during the period - - - - Cash and cash equivalents - Beginning of period - - - - Cash and cash equivalents - End of period - - - - KP Tissue Inc. Unaudited Condensed Statements of Cash Flows (thousands of Canadian dollars)